Feb 4, 2019
Pacific Gas & Electric (PG&E) Corp. filed for bankruptcy protection last Tuesday, in anticipation of huge legal claims due to very deadly and destructive California fires sparked by its electric power lines.
PG&E is the largest utility company in California, providing natural gas and electricity to 16 million people. This very profitable company charges its customers more than companies in other states. California's residential electricity prices are 19 to 40 percent higher than those in neighboring states of Arizona, Nevada and Oregon.
PG&E officials argue bankruptcy is the only option because they cannot pay for their liabilities. But PG&E currently has a lot of money in its hands. It hides $1.5 billion in cash or cash equivalents in its coffers. It has already arranged $5.5 billion from the banks to fund its operations during bankruptcy. The California Public Utilities Commission also unanimously approved the company's request to take on $10 billion in emergency financing.
PG&E is surely seeking bankruptcy protection as a scheme to avoid its liability and continue to profit. It did the same thing in 2001. At the time, the company said it needed relief from $9 billion in debt, incurred after a failed deregulation plan that allowed Enron and other energy traders to manipulate markets and fleece their customers. It took nearly three years for PG&E to come out of the bankruptcy. Meanwhile, state regulators allowed PG&E to boost its profits for years to come. Customers paid skyrocketing utility prices, and PG&E's shareholders pocketed the profits.
Energy experts say PG&E's rates will probably increase when the company emerges from its current bankruptcy, as they did in 2001.
Also, claiming it’s broke, PG&E has already stopped honoring settlements with the 2,900 victims of the 2015 Butte fire. Victims of 2017-2018 California fires would not get anything, allowing PG&E to avoid its liabilities.
In sum, if this bankruptcy scheme goes through, customers will pay higher rates, and PG&E will continue to profit as before, as if nothing happened.